EUR/USD 5M analysis.
During the fourth trading day of the week, the EUR/USD pair managed to show all kinds of movements that are only possible. During the European trading session, the pair traded in absolute flat. In the American session, it first rose by 85 points, and then fell by 140. Moreover, it is very difficult to link the macroeconomic and fundamental data that were available during the day with what is happening on the market. For example, why did the euro currency grow strongly in just 10 minutes when the ECB published its decision on the rate? The rate itself has not changed, nothing has changed, why did the growth happen then? And why did there be an increase of 200 points a day earlier? These questions remain unanswered. This was followed by a powerful fall, which began even before the publication of the report on American inflation and the speech of Christine Lagarde, who, by the way, again did not inform the market of any important information. Only the increased inflation in the US to 7.9% could provoke the growth of the dollar.
Trading signals due to heterogeneous movements during the day were very different and among them, there were false ones. All signals in the European trading session formed around the level of 1.1057 and turned out to be false. However, traders managed to avoid a loss on them, since before the publication of the ECB's decision on rates and the inflation report, it was necessary to close deals and exit the market. If this happened, it was even possible to earn a little on the only sale transaction at that time. The buy signal at the beginning of the American session should have been filtered out since, at the time of its formation, the price had already gone up about 60 points. A sell signal near the 1.1057 level could be worked out since only one deal was opened for the very first two sell signals near this level, although formally both were false. As a result, the pair ended up near the 1.0990 level, bounced off it, where it was possible to close short positions. A small profit could have been made yesterday.
COT Report:
The new COT report, which was released on Friday, showed a new strengthening of the "bullish" mood among professional traders. This time, the Non-commercial group has opened about 16 thousand contracts for purchase and 6.8 thousand contracts for sale. Thus, the net position increased by another 9 thousand, which is visible on the second indicator in the illustration above. The total number of purchase contracts exceeds the number of sale contracts by 70 thousand, so now we can say that a new upward trend is beginning to form. The only problem is that the euro continues to fall, and not to grow in any way. And this is an absolute divergence. What are we observing now? We observe that the demand among major players for the euro currency is growing, but at the same time, the euro currency itself is falling. What does this mean? This means that the demand for the US currency is growing at a much higher rate. After all, COT reports reflect exactly the demand for the euro currency, not taking into account the dollar. And the dollar is now used by the whole world as a reserve currency. In a difficult geopolitical situation, the demand for the dollar is only growing, which is why we are seeing such a picture. Based on this, we can conclude that now COT reports cannot be considered to predict the further movement of the euro/dollar pair. These reports simply do not coincide with what is happening in the market itself. Therefore, we need to wait for the resolution of the geopolitical conflict in Eastern Europe.
EUR/USD 1H analysis.
On the hourly timeframe, it can be seen that the downward trend continues, as the price continues to be below the trend line. The price failed to confidently overcome the Senkou Span B line, so the downward movement may resume. The European currency continues to take a weak position against the US dollar after the ECB meeting. On Friday, we allocate the following levels for trading - 1.0767, 1.0990, 1.1144, 1.1234, 1.1274, 1.1321, as well as the Senkou Span B (1.1081) and Kijun-sen (1.0965) lines. There are also auxiliary support and resistance levels, but no signals will be formed near them. The lines of the Ichimoku indicator may change their position during the day, which should be taken into account when searching for trading signals. Signals can be "bounces" and "overcoming" levels-extremes and lines. Do not forget about placing a Stop Loss order at breakeven if the price went in the right direction of 15 points. This will protect against possible losses if the signal turns out to be false. On March 11, no important events or publications are planned in the European Union. In the US, it is only a secondary index of consumer sentiment. Thus, if the geopolitical background is also absent, then the market will have nothing to react to. However, this does not mean that the pair will necessarily stay flat all day with minimal volatility.
Explanations to the illustrations:
Price levels of support and resistance (resistance/support) - thick red lines, near which the movement may end. They are not sources of trading signals.
Kijun-sen and Senkou Span B lines - the lines of the Ichimoku indicator, transferred to the hourly timeframe from the 4-hour one. Are strong lines.
Extreme levels - thin red lines from which the price bounced earlier. They are sources of trading signals.
Yellow lines - trend lines, trend channels, and any other technical patterns.
Indicator 1 on the COT charts - the net position size of each category of traders.
Indicator 2 on the COT charts - the net position size for the "Non-commercial" group.